There has been a significant and continued drop in wine sales in the Australian on premise over the past year, with experts suggesting that lack of interest among under-35s is to blame.

While cost-of-living pressures have played a rose in decreased spending, CGA’s BeverageTrak Australia reports have revealed the declines seen in wine are considerably stronger than those seen in spirits and particularly beer.

According to CGA by NIQ Senior Manager Tom Graham, wine is competing with more options, more competition and faster trends.

“It’s no secret that the number of drink options available in the On Premise has increased, from hard seltzers and ginger beer to cocktails and craft beer, meaning greater competition for share of throat,” he said.

“Whilst this is also true in the retail space, see the regularity of NPD in RTDs and the growing shelf space for these as an indicator, the challenge is intensified in the on premise, where footfall and spend are weighted more towards younger generations, who are driving the uptake of newer categories.

“The data speaks for itself, those under 35 are the least likely group to drink wine in the on premise, with only 31% stating they do so in a typical three-month period) compared to 37% for 35-54s and 45% for over 55s.

“Compare that to cocktails, where over half of under 35s [51%], drink them in the on premise, you start to see the recruitment challenges faced.”

As for why wine isn’t capturing the hearts and minds of younger consumers in the on premise, Graham says they are loking for ‘high tempo drinks’ and least likely to visit for a ‘casual meal’.

He asks: “So could it be wine doesn’t meet the need states younger consumers are seeking on their priority occasions?”

According to CGA’s OPUS research, the top 3 need states consumers seek when choosing drinks during high tempo drinks are; to have fun, to socialise and to celebrate. While for casual meals, they are; to enjoy, to relax and for a treat.

But he says there are glimmers of hope in wine that are bucking the trend and successfully engaging younger drinkers.

“Younger drinkers align more closely with the likes of sparkling wine and rose, whilst the growing popularity of the spritz cocktail, with over 50% of the ingredients being wine, show that not all hope is lost and there are still opportunities to engage them.

“But clearly these are evolving and the traditional approach to wine path to purchase; long menu lists and nuanced information may be a barrier for younger drinkers looking for an exciting drink to post on social media.”

He suggests taking the most important components of a cocktail menu as what might work with younger consumers in wine.

“When asked in our OPUS survey, it was ingredients, pricing, pictures and tasting notes/flavour descriptions all in the top five,” he said.

“What we saw as the least important was also interesting, things like options for food pairings, serve size and ABV all down on the list of influencers.

“Clearly then it is more about the taste, look and feel of the cocktail as opposed to the finer details. Could the information on wine menus be too complicated and confusing, making it harder for newer drinkers to confidently enter the category?”

Factors behind on-premise wine decline

Analysis shows Australia remains one of the world’s top markets for still wine, despite wine consumption in Australia declining by 9% from 2020 to 2022, equating to a reduction of around 50 million litres.

Australia is the 12th largest wine consuming country in the world, with just under 2% of global consumption in 2022.

Australia was ranked the 8th most attractive market for still wine in 2022 according to the Wine Intelligence 2023 Global Compass, despite declining consumption.

Wine Australia released its Australian wine market insights report earlier this year, which shows the on-premise – restaurants, bars and hotels – accounts for around 20% of wine consumption by volume.

Despite its small share of overall wine sales, the on-premise is considered an important channel for building brand recognition and introducing consumers to new brands, products and varieties. ‘By-the-glass’ options give consumers the opportunity to trial a new wine with less risk than buying a bottle for home consumption.

Wine Australia also noted: “The CGA by NIQ ‘On Premise User Survey’ (OPUS) has found that younger people (18-34) are over-represented among regular on-premise visitors, making this a good channel to connect with Gen Z consumers.”

Decline in visit frequency and spend

A monthly survey conducted of on-premise visitation by CGA by NIQ found that in late 2023, frequency of visits declined
compared with the same time the previous year, while the value of sales of alcohol in the on-premise across the
12-week period to end October 2023 declined by 23% compared with the equivalent period in 2022.

All alcohol categories declined in both total value and number of sales; however, for wine, the decline in total sales revenue was the largest at 32%, compared with 19% for beer and 22% for spirits – although wine did better than spirits in eating venues.

The popularity of formal dining restaurants declined in 2023, with the percentage of on-premise visitors ’typically’ visiting this type of venue falling by 16 percentage points from 41% in September 2022 to 25% in September 2023. Wine Australia said this decline was likely to have a disproportionately negative effect on wine, which dominates choice of drink in these venue types.